Last year, Standard and Poor’s (S&P) made its long-awaited move into the Australian retail space, formally launching Australian Fund Management Ratings — a rating and research tool aimed at financial planners and dealer groups.
According to S&P’s head of fund services Mark Hoven, the decision to expand its offering was carefully planned. “We’ve spent the past 12 to 18 months pulling together a critical mass to offer the retail market that has largely been fund manager ratings, in some ways it’s been about taking our institutional offering and repackaging it,” Hoven says.
A key part of the group’s strategy to infiltrate the competitive retail space has been through the launch of its own subscription-based web site and forming alliances with external software providers as a vehicle for driving their product to market.
“We turned it on recently with our web site, and we are actively seeking a multi-channel distribution,” Hoven says.
But for an investment research house that boasts 140 years of industry participation, how important is technology in helping build its reputation?
“Third party alliances with software providers, platforms, information vendors and web sites are absolutely important, it’s about document-based delivery — a quick way of getting information out there,” he says.
To this end, S&P last month struck a deal with financial planning software firm Xplan Technologies to offer its reports and ratings on managed funds, hybrid securities, retirement products and structured credit products.
And S&P is confident its latest research venture will catch on.
“S&P is a global organisation that provides a similar service in other parts of the world. One reason is our independence — we have a position in the industry that has been established from purely looking at products, plus we offer services to the Australian marketplace that extend beyond managed funds, for example, indices and credit ratings,” S&P managing director Chris Dalton says.
Hoven says S&P does not charge fund managers to rate them, but does assign a licence fee if the manager wants to take the research and use it for its own purposes.
“Our business depends on the credibility or reputation we provide,” Dalton adds.
Turnaround time and speed of service delivery is another key area that S&P is focused on.
“We’d like it to be faster, we are actively working to shorten it,” Hoven says, but explains that the process of rating has been slower than usual during this formative period.
“For us, every rating has been a new rating,” he says.
In the Money Management Rating the Raters survey, S&P ratings were deemed as one of the least influential on a fund manager’s business, but managing director Chris Dalton says this reaction is premature and as the new kid on the retail block, is to be expected.
“It’s a work in progress, and we are consulting with planners and dealer groups. Our strategy is to build a wider service to the financial planning community,” he says.
And what does S&P think is going to get them over the line at the end of the day?
“A consistency of approach,” Dalton says.
